Canadians are expected to boost Nintendo’s (NTDOY) booming sales, as more flock to purchase the family-friendly console, experts say.
On Nov. 5, the Japanese company increased financial forecasts based greater interest from customers stuck at home because of COVID-19. Nintendo is now projecting 450 billion yen (US$4.3 billion) of operating profit for the year, up 50 per cent, and forecasting sales of 1.4 trillion yen, up from 1.2 trillion yen. The company says sales from its Switch console are expected to increase to 24 million units, up from 19 million.
Evan Kubes, president and co-founder of MKM Group esports, said in an interview that the increased projections were not surprising, nor is it surprising for all gaming companies to see a massive boost in sales.
“Everything from live events, basic entertainment like going bowling or going out to a restaurant, everything is closed down. I think families and younger kids are stuck at home and there are very little ways to entertain yourself in your free time,” he said.
Particularly in Canada, Kubes noted that people have faced stringent lockdown measures compared to other countries and that proliferation is seen on a much broader scale.
“We’re not a stranger to video games. We have a grassroots video game culture, so I would expect Canada to be a significant contributor to just the overall growth, to Nintendo’s projections and gaming at large,” he said.
Overall spending in Canada on total physical hardware, software and accessories, and digital console and PC content increased 25 per cent year-over-year, according to stats from the NPD Group.
It added that strong growth was seen across Nintendo’s Switch, Sony’s PlayStation 4, and Microsoft’s Xbox One, leading to an overall hardware category sales increase of 46 per cent compared to the same period a year ago.
“During the pandemic, many people have turned to video games not only as a source of entertainment but as a way to stay in touch with friends and family with online play,” Joan Ramsay, industry analyst for Canada entertainment for the NPD Group, said in the report.
“What we’ve seen, in addition to new players discovering gaming, is more video game players playing for more hours, while spending more in the process. They are discovering that the industry provides a wide variety of ways to play to meet every budget, interest, and device.”
Gaming offers emotional connection, helping mental health
Jayson Hilchie, president and CEO of the Entertainment Software Association of Canada, said in an interview that the growth is also attributable to more Canadians wanting to take care of their mental health.
“There is an emotional and human side to what’s driving those sales,” he said. “It’s one thing to say consoles are selling like hotcakes during the pandemic, but there’s a human element as to what is happening. People are isolated, missing their families and friends. Video games have played an unprecedented role in not only entertaining people but connecting them.”
Like Nintendo, Sony and Microsoft also expect increased sales as both companies launched new consoles this week. Microsoft launched its Xbox Series X and S earlier in the week, and Sony launched the PlayStation 5 Thursday.
Lewis Ward, research director of gaming at International Data Corporation, an analytics research firm, said it’s a transition year for Sony and Microsoft.
“In North America, so U.S. and Canada, there will be 8.9 million bundles shipped [of all consoles] into the region compared to the 7.5 million that was shipped in the same period a year ago,” he said.
Twitter sees surge in gaming conversations
Console sales are expected to increase because of the way companies are leveraging social media.
On July 23 when the Xbox series was showcased Twitter saw a 508 per cent increase in tweets compared to the 30-day average prior. On Sep. 11 when the PlayStation 5 was showcased Twitter saw a 690 per cent increase in tweets.
Hilchie said that the industry had been moving to use social media more, but now that the pandemic has changed live events and gaming conferences, companies are capitalizing on social media to market new consoles.
Lewis added that the pandemic has forced companies to test their digital marketing strategies “in a way they haven’t been tested before.”
“They’re having to exercise different muscles and that could be standard digital ads or it could be aligning themselves with certain popular streamers or media influencers. Depending on how they approach it will affect the conversation and change their marketing mix,” he said.